Certain Underwriters at Lloyd's, London v. Reproductive Genetics Institute

Citation: 2018 IL App (1st) 170923Docket: 1-17-0923

Court: Appellate Court of Illinois; July 31, 2018; Illinois; State Appellate Court

Original Court Document: View Document

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Certain Underwriters at Lloyd’s, London (Lloyd’s) appealed the dismissal of its amended complaint seeking contribution from Reproductive Genetics Institute (Genetics Institute) following a settlement related to a lawsuit involving the sperm of donor N-170, which was found to carry the delta-F508 mutation for cystic fibrosis. The case originated from a 2011 lawsuit filed by the Kretchmars in Oklahoma against NECC, Lloyd’s insured, after their child was born with cystic fibrosis attributed to donor N-170’s sperm. NECC had purchased the sperm from the Cryobank, which had previously received assurances from the Genetics Institute that the samples were free of the mutation. The Oklahoma court approved a settlement between the Kretchmars and NECC, with Lloyd’s covering the settlement. 

Lloyd’s filed its initial complaint against the Genetics Institute in 2013, which included claims of contribution, negligence, negligent misrepresentation, and breaches of warranty. The Genetics Institute successfully moved to dismiss the complaint, leading to this appeal. The appellate court affirmed the circuit court's judgment, rejecting Lloyd’s argument that the Contribution Act and case law supported its claim for contribution.

On June 26, 2014, Lloyd’s amended its complaint, modifying its claims by consolidating warranty counts into one for breach of express warranty, while retaining counts for contribution, negligence, and negligent misrepresentation. The Genetics Institute moved to dismiss the complaint under sections 2-615 and 2-619 of the Illinois Code, arguing, based on Laue v. Leifheit, that a contribution claim must be made in the underlying lawsuit. The trial court granted this motion, dismissing the complaint with prejudice. Lloyd’s later sought reconsideration, contending that neither the Contribution Act nor Laue applied since the underlying suit was in a different jurisdiction. The trial court upheld the dismissal of the contribution claim but reversed its decision regarding the breach of express warranty count. 

Lloyd’s then filed a second amended complaint, reasserting the contribution claim and the amended warranty count, but the Genetics Institute again moved to dismiss. On March 22, 2017, the court dismissed the second amended complaint, prompting Lloyd’s to appeal the dismissal of its contribution claim. 

Lloyd’s argues the trial court incorrectly interpreted Laue, asserting that the requirement to bring a contribution claim in the underlying lawsuit does not apply since the Genetics Institute was not subject to jurisdiction in that case. Lloyd’s posits that public policy favors allowing a separate contribution action in Illinois, as it would not impose additional burdens or risks of inconsistent verdicts due to a settlement in the Oklahoma case. 

The document explains that a section 2-615 motion to dismiss challenges the legal sufficiency of a complaint, and such a motion should only be granted if it is clear that no facts could support a recovery. The appellate court reviews the dismissal de novo, with statutory interpretation also receiving de novo review. The Contribution Act allows for separate actions for contribution among joint tortfeasors, which Lloyd’s references to support its position.

In Laue, 105 Ill. 2d at 196, the Illinois Supreme Court interpreted section 5 of the Contribution Act, mandating that claims for contribution must be raised in an ongoing underlying action, either as a counterclaim or third-party claim. The court's interpretation was literal, without mention of exceptions. It clarified that there was no presumption regarding the trial court's personal jurisdiction over third-party defendants. Following Laue, the legislature passed Public Act 89-7, permitting contribution claims in separate actions, but this amendment was later deemed unconstitutional in Best v. Taylor Machine Works, 179 Ill. 2d 367 (1997). Since then, no legislative changes to section 5 have occurred, implying the legislature's intention to maintain the requirement that contribution claims be part of the underlying action. The case of Harshman, 218 Ill. 2d 482, further demonstrated this principle, where a separate contribution action was dismissed because the plaintiffs had been denied leave to file a third-party complaint in another jurisdiction. The Illinois Supreme Court affirmed that exceptions should not be read into clear statutory language. The court noted the possibility of differing judicial interpretations across jurisdictions but maintained that the legislative intent was to restrict contribution claims to the context of the original lawsuit.

The ruling in Harshman emphasizes the strict application of the Laue rule, which mandates that a party must file a contribution claim in the underlying action, regardless of whether the original court denies such a claim. Lloyd’s contends that Laue is inapplicable due to the Oklahoma court's lack of personal jurisdiction over the Genetics Institute, speculating that this would have led to a denial of their contribution claim. However, unlike in Harshman, there is no evidence that Lloyd's sought to assert a contribution claim in the Oklahoma litigation. Thus, even if the claim would have been denied, Lloyd's failure to attempt filing in the underlying lawsuit offers them no relief. 

The court rejects Lloyd's assertion that public policy considerations justify filing a separate action in Illinois, noting that Laue identified significant public policy reasons for barring claims not included in the original litigation, such as increased burdens on the judicial system and potential for inconsistent verdicts. The court further clarifies that the term 'pending action' in Laue encompasses all actions, regardless of whether they proceed to trial. 

Lloyd's request for the court to correct perceived errors in Laue is denied, as the court is bound by Illinois Supreme Court precedent, which can only be modified or overruled by the Supreme Court itself. Despite acknowledging the reasonableness of Lloyd's public policy arguments, the court affirms the dismissal of Lloyd's complaint, reinforcing adherence to established case law. The circuit court's dismissal is thus upheld.